Post Reliance communications and Reliance Jio collaboration for Reliance communications fiber optic cable network usages to enable Reliance Jio flexibility to move into service offering mode quickly. The 1200 cr payment from Reliance Jio got lots of cheer among reliance communications investor given their stalled revenue growth and increasing debt level. Once, foe turned into collaborated started industry speculation that more deals are in the offing’s. Yesterday announcement by both the company on 45000 tower sharing agreement for 15 years tenure at mutually agreed 12000cr is nothing but super banner wins for Reliance communications investors as well as potential investors for taking stake in Reliance communications. The Reliance Jio contract would positively impact Reliance communications revenue by 5% every quarter. It would help Reliance communications to improve its falling EBITA level to stable 30% level in order to generate enough cash to serve financial cost associated with 35000 cr plus debt level. At the same, in recent quarter Reliance communication initiated proactive approach by outsourcing network management, customer management, new product launch management to leading Network servicing companies to reduce fixed cost and tagged contract value on the basis of QoS, Network occupancy, Average revenue per minute, Average revenue per product/services/applications. After failed attempt to launch their Flag IPO due to valuations in Singapore and recent interest by telecom and PE giant; the concluded deal with Reliance Jio would give higher flexes to Reliance communication to ask for higher valuation for the minority or majority stake in the intended business which they feel can be divested to reduce their debt burden to reasonable level. Any probable divestment of target business segment may act as super opportunity for long term investor to reap in huge financial gains. The speculation of potential deal with Reliance Jio pushed Reliance communications share to achieve around 97% gain in last 3 months whereas peers share prices are struggling. Just imagine company share prices if Reliance communications manages to close proposed deal in respective business unit.
Disclaimer: The above assessment is completely author assessment. Any potential investors are advised to take suggestions from recognized financial analyst.
